Short-term pension measures planned

The Austrian Government's budget plans for 1998 and 1999 include cutting state contributions to the national pension insurance schemes. Proposed measures focus on reducing entitlements, creating disincentives to early retirement, and raising top contributions.

In Austria's "pay-as-you-go" pensions system, 22.75% of an individual's monthly wage cost goes to pension insurance. There is a cap at a certain monthly income - currently ATS 41,400 - which is raised annually. The gap between contributions and benefits is covered from the federal budget. In 1996, ATS 30,000 million had to be covered by the budget in the employees' scheme, which has 1.5 million pensioners, and ATS 25,500 million in the self-employment and agricultural schemes, which has 345,000 pensioners. The overall contribution from the federal budget is forecast to rise from ATS 55,500 million in 1996 to over ATS 80,000 million by the year 2001. In its recently-announced budget plans, the Government is aiming to save ATS 16,000 million in contributions to the national pension insurance schemes over the two years 1998 and 1999.

One-third of the budget savings are to be made by raising ATS 5,500 million from surpluses in the national unemployment and accident insurance funds, as has been done repeatedly in the past.

Another ATS 4,000 million is to come from raising top contributions, though not permanently. The Ministry of Labour, Health and Social Affairs has been suggesting the consolidation of five years' increments in 1998. Such a measure would mostly affect salaries rather than wages, and it would especially affect men - nearly 200,000 of them as opposed to fewer than 40,000 women. For the individual income earner, the effect would be partly offset by lower income tax.

A further ATS 2,400 million is expected to accrue from measures to raise the average retirement age. This currently stands at 58.2 years for men and 56.7 years for women, compared with early retirement ages of 60 and 55, respectively, and full retirement ages of 65 and 60. In the employees' pension scheme there are currently about 960,000 regular pensioners, 204,000 early retirement pensioners, and 388,000 disability pensioners.

Another likely measure is a stretching of the pension" base period" from 15 to 20 years. The base period is made up of the years when the highest pension contributions were paid. If 35 (men) or 30 (women) years of contributions are accumulated, the pension is based on 80% of the average contributions during the base period. For every year less, there is a deduction from the pension. The Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) estimates that an increase from 15 to 20 years would lower new pensions by roughly 2%. It is generally acknowledged that women would be affected more than men, unless compensatory measures are taken. In the past, this repeatedly took the form of counting specific periods of absence from the labour market into the 30 insurance years required for a full pension.

Civil service pensions cost roughly ATS 124,000 million in 1996. Here, too, cuts are to be made, though not in the next two years.

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